JPY Intervention Levels Assessed Ahead of Jackson Hole, Yen Offered

Yen weakness continues on Monday after clawing back some losses last Friday. Markets may look to test 150 after Suzuki clarifies concern over yen volatility, not level

US President Joe Biden welcomed Japanese and South Korean leaders to Camp David, condemning China’s recent “dangerous and aggressive behaviour”. The meeting comes at a time when China is conducting military drills around Taiwan, with Taiwan reporting 71 Chinese planes crossing the Taiwan Straight median line. The line serves as an unofficial barrier between the two sides.

In other developments, talk about Japanese intervention has calmed since Japanese Finance Minister Shunichi Suzuki announced that undesirable FX volatility matters more than the level of the currency. Such an admission appears to have set a target for /JPY traders around 150 to test the resolve of the finance ministry. An update from JP Morgan reveals an interest in the 150 mark as the level that may spark FX intervention.A strong start to the week for US 10-year yields has strengthened theand sees USD/JPY start the week on a positive note. Last week, worsening Chinese data meant the dollar was primed for further upside, particularly as yields rose on positive US economic data.

This week, the economic calendar is very light. Apart from August flash PMI data, markets will be looking ahead to Thursday and Friday as the Fed ‘s annual Jackson Hole Economic Symposium is upon us. It remains to be seen whether any major bombshells will be leaked at the event but the likelihood appears slim.

USD/JPY trades higher in the moments after the US session began, eying a return to Thursday’s swing high at 146.50. The dollar bull trend remains constructive, therefore, the dotted blue line of 150 becomes a massive target. A rejection of 146.50 brings the 145 level back into play, on the downside. If the yen starts to see a return to favour – perhaps on renewed geopolitical tensions in the region – 142.25 may become relevant.

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